Jan. 21, 2015
Alcoa Reports 'Year of Significant Transformation'
Alcoa reported a jump in fourth-quarter and full-year 2014 profits, culminating a year of significant transformation, the company claims.
In fourth-quarter 2014, Alcoa reported sales of $6.4 billion, a 14 percent improvement compared with fourth-quarter 2013. Higher sales in Alcoa’s value-add businesses, along with favorable metal prices and energy sales, drove the year-over-year increase.
The company saw net income for the quarter of $432 million, reporting a $159 million profit after special costs related to restructurings. That compares to net income of $40 million for fourth-quarter 2013.
“Our strong fourth quarter capped a pivotal year as we significantly accelerated Alcoa’s transformation,” said Klaus Kleinfeld, Alcoa chairman and CEO. “As we built out our value-add businesses, we gained profitable share across exciting downstream growth markets and captured aerospace and automotive growth in the midstream. On the commodity side, our hard work reshaping the portfolio continues to pay off with improved performance for the 13th quarter in a row. In 2014, we delivered Alcoa’s strongest operating results since 2008; we enter 2015 on solid footing, poised to continue transforming and growing.”
For full-year 2014, Alcoa reported net income of $268 million on sales of $23.9 billion. That compares to a net loss of $2.3 billion on sales of $23.0 billion in 2013.
Alcoa's Engineered Products and Solutions business reported its 19th consecutive quarter of year-over-year after-tax operating income growth, excluding Firth Rixson. Global Rolled Products continued to benefit from the historic shift to aluminum intensive vehicles, shipping a record volume of automotive sheet.
Alcoa continued to make investments to expand its multi-material portfolio. Downstream, the company completed the acquisition of jet engine component manufacturer Firth Rixson. It also announced plans to purchase TITAL to grow its platform of titanium aerospace components. Additionally, Alcoa is doubling the jet engine coating technology capacity at its Whitehall, Mich., facility. Its investments in the robust aerospace market are designed to take advantage of the growing demand for hotter-running, more fuel-efficient jet engines.
In the midstream, the company unveiled its new Micromill, claimed to produce the most advanced aluminum sheet on the market. Alcoa says the new casting technology will enable it to meet growing demand for formable, lightweight aluminum sheet from the automotive industry. Also in the fourth quarter, the company finalized the sale of three European rolling mills and completed the closure of two can sheet rolling mills in Australia.
Upstream, Alcoa continued to reduce costs to make its commodity business more competitive on a global scale. It sold its interest in the Jamalco bauxite mining and alumina refining joint venture to Noble Group Ltd. for $140 million, and its interest in the Mt. Holly aluminum smelter to Century Aluminum Co. for $67.5 million. Alcoa says it has curtailed, closed or sold 1.3 million metric tons, or 31 percent, of its highest cost global smelting capacity since 2007.
In 2015, Alcoa projects a 9 to 10 percent increase in aerospace sales on robust demand for large commercial aircraft, regional jets and jet engines. For automotive, the company projects steady growth of 2-4 percent, driven by replacement demand and low lending rates in North America and growth in China. Building and construction should continue to improve in North America, but will remain weak in Europe. In total, Alcoa forecasts global aluminum demand growth of 7 percent in 2015, following 7 percent growth in 2014.